March 22, 2007 | Read Time: 1 minute
Foundations should stop claiming they will suffer “apocalyptic” damage if they are forced to increase the share of their assets they distribute in grants each year from 5 percent to 6 percent, Todd Cohen writes in his blog Inside Philanthropy.
“Foundations claim they are at risk of going out of business, but they actually must be laughing all the way to the bank and the country club,” he writes.
Mr. Cohen, who also edits the online publication Inside Philanthropy for the A.J. Fletcher Foundation, in Raleigh, N.C., says critics argue rightly that current law gives foundations “an unfair edge in the charitable marketplace.”
“Their donors get big tax breaks up front; the foundations have to spend only 5 percent of their assets each year, and can count overhead costs as part of their payout; and the assets they hoard give the donors and their successors unbridled power and influence.”
Mr. Cohen also takes Duke University’s Joel Fleishman to task for arguing in his book The Foundation: A Great American Secret that “perpetual foundations” are critical to American democracy. That, he says, is an overstatement.
“Too many foundations are smug, fat, and lazy, and their main interest in dealing with government these days seems to be to preserve and protect their assets and power, not to push government to fix flawed public policies that underlie our most urgent problems.”
(Read The Chronicle of Philanthropy’s article on Mr. Fleishman and his book.)
Do you agree with Mr. Cohen’s complaints about foundations? Discuss this topic by clicking on the comment space just below this posting.
